Faber News Flow

Peter Beinart January 1, 2020 By abandoning diplomacy, the president risks war, humiliation, or both—and has put himself at Iran's mercy. Professor of journalism at the City University of New York Wissm al-Okili / Reuters Over the past 18 months, Donald Trump has picked a fight with Iran that he won't end and can't win. That fight has had  horrifying consequences  for the Iranian people, led Tehran to restart its nuclear program, and now left parts of the American embassy compound in Baghdad in flames. In the days and weeks to come, Trump's policy will likely lead either to war or to additional American humiliation, or both. The fight began in May 2018, when the Trump administration left the Iran nuclear deal, and intensified last spring, when the United States  designated  Iran's Revolutionary Guard Corps a terrorist organization and  moved to shut off Iran's ability to export oil. Numerous observers warned that Iran would meet America's escalation with esc...

America's no.1 futurist George Gilder, fears the U.S. has lost its technological and entrepreneurial edge. China has instead emerged as the next global technological leader. Today Mr. Gilder defends a controversial Chinese company against accusations by   The Wall Street Journal,  and shows you why the U.S. is in no position to complain. On Christmas day, overflowing with holiday cheer and bursting with goodwill for all men, I decided I could let pass the latest  Wall Street Journal  resentful essay against China's emergence as a global leader in technology. There it sat on the front page, one more egregious slander, this time in the form of a "special report" portraying the telecommunications giant Huawei as a dependency of the Chinese government. Ah, but it was Christmas and to the intrepid — and far as I knew, merry — gentlemen of the  Journal  I was content to wish God's rest and the good tidings of the day. Now, after winging my way back to China, I am...

The setup is just too juicy. In my decades of looking at the stock market, there has never been a better setup. Exuberance is pandemic and sky-high. And even after today's dip, the S&P 500 is up nearly 29% for the year, and the Nasdaq 35%, despite lackluster growth in the global economy, where many of the S&P 500 companies are getting the majority of their revenues. Mega-weight in the indices, Apple, is a good example: shares soared 84% in the year, though its revenues ticked up only 2%. This is not a growth story. This is an exuberance story where nothing that happens in reality – such as lacking revenue growth – matters, as we're now told by enthusiastic crowds everywhere. Until just a couple of months ago, the touts were out there touting negative interest rates soon to come to the US and thus making stocks the only place to be. Those touts have now been  run over by reality . Now they're touting QE4 by the Fed, or whatever. And people were looking for any reason...

Start over in the new year.  Also, start over at any other time during the rest of the year, whenever you want, as often as you like.   Time is an illusion anyway. I cannot assure you that things will get better in the '20s. I can't assure you that they'll get worse, either. What I can absolutely guarantee is that  things are going to keep getting weirder and weirder.  At this point in time the only reliable pattern is the disintegration of patterns. Artist and author Alasdair Gray dies aged 85 The mainstream worldview isn't mainstream because it is more fact-based, logical, or makes better arguments than other potential worldviews, it's mainstream because vast fortunes are poured into keeping it mainstream. "Why do those people hate us?" "We destroyed their country." "We should leave the Middle East then." "We can't" "Why not?" "Israel." "What about it?" "Those other countries hate it....

Following  Europe's disappointing downturn this morning  (and UK), US' final Manufacturing PMI print for 2019 was expected to confirm a slight deceleration in the late-year rebound. However, it was a disappointment, as the final US Manufacturing data dipped from 52.6 in November (and 52.5 in flash December data) to 52.4... Source: Bloomberg Can Uber Ever Recover After Its Disappointing IPO? Chris Williamson,  Chief Business Economist at IHS Markit said : "The US manufacturing sector continued to recover from the soft-patch seen in the summer, ending 2019 with its best quarter since the early months of 2019. "The overall rate of expansion nevertheless faltered somewhat in December and remains well below that seen this time last year,  suggesting producers are starting 2020 on a softer footing  than they had enjoyed heading into 2019. " Business sentiment about the outlook remains especially subdued compared to a year ago,  reflecting ongoing worries about ge...

Over-the-Counter and Centrally Cleared Derivative Contracts at Banks in U.S. as of September 30, 2019 (Source: OCC) After the epic financial crash on Wall Street in 2008 – the worst since the 1929 crash and ensuing Great Depression – two key reforms were put in place in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to prevent another catastrophic meltdown on Wall Street. The first key reform was that derivatives were to be moved out of the federally-insured, taxpayer backstopped commercial banks, that had been bought up by Wall Street trading houses, into units that could be wound down in a bankruptcy proceeding. It was called the "Push Out" rule. That reform was also meant to prevent the New York Fed from ever again  secretly pumping upwards of $29 trillion  into Wall Street trading houses and their derivative counterparties in order to bail out a corrupt casino banking system. (And yet here we are again today watching  the New York Fed pump hundr...

It was supposed to usher in a market crisis that would prompt the Fed to launch QE4 according to   repo guru Zoltan Pozsar . In the end, the preemptive   liquidity tsunami  unleashed by the Fed in mid-December which backstopped just shy of $500 billion in liquidity, proved enough to keep any latent repo market crisis at bay. The year's final overnight repo operation, which the Fed expanded to as much as $150 billion ended up being just 17% subscribed, as Dealers submitted only $25.6 billion in securities ($15.2BN in TSYs, $2BN in Agencies, $8.35BN in MBS) in the year, and decade's, final overnight repo meant to bridge the financial system's short-term funding needs into 2020. As a result of the Fed's massive, preemptive liquidity backstop, the overnight G/C term repo rate quickly dropped back to a subdued, and quite normal, 1.55% after starting the day north of 1.80%. One thing is certain: last New Year's firework, which saw the overnight G/C repo rate s...

This little monster that feeds beneath the surface of global banking at its core briefly raised one ugly eye out of the water as 2018 turned into 2019. I wrote back then that the interest spike we saw in the kind of overnight interbank lending known as repurchase agreements (repos) was just the foreshock of a financial crisis being created by the Fed's monetary tightening. I said the Fed's continued tightening would eventually result in a full-blown recession that would emerge, likely out of the repo market, sometime in the summer. In the very last week of summer, the Repo Crisis raised its head fully out of the water and roared. When I first wrote of these things at the start of 2019, the Fed had only been up to full-speed tightening for three months, and already it was blowing out the financial system at its core. The stock market had just crashed with the onset of full-speed tightening just as I had said it would. It fell hard enough to where the only index holding j...